Popular Business Acquisition Loans in 2025

One of the most appealing aspects of owning a business is the abundance of opportunities. There isn’t just one way to start or run a business. For example, if you don’t want to go through the hassle of creating a new business, you can buy a franchise or purchase an existing business. While it can be challenging, you can jump right in and get started. On the other hand, veteran entrepreneurs looking to expand their startup may consider acquiring another business as part of their growth strategy. In these types of situations, you can capitalize on an opportunity. However, there is typically a substantial investment required. If you don’t have the funds available, you can look into business acquisition financing.

What is Business Acquisition Financing?

Business acquisition financing refers to the various funding options available to acquire a business. Typically, these include multiple loan options that help business owners:

• Acquire an established business
• Purchase a franchise
• Provide funds for a buyout if you’re splitting with a business partner

This type of financing is specifically geared toward acquiring a business. So, it’s not a general-purpose loan to help with working capital or basic cash flow needs. As such, the underwriting for business acquisition financing can be rigorous.

What To Consider Before Getting Business Acquisition Financing

Before researching business acquisition financing options, here are some key things to consider:

• Eligibility: Though every lender has different requirements, you need to qualify to receive this type of financing. Review your personal credit score, business credit score, time in business, and annual revenue.
• Financial commitments: You may need to put down a form of collateral and/or a down payment to qualify for business acquisition financing.
• Cash flow: The primary benefit of business acquisition financing is that you don’t need to pay a large sum of money upfront. Instead, you can spread out costs for the duration of your repayment term. Still, you’re responsible for monthly payments. Know how this added cost will affect your cash flow.
• Documentation: As part of the application process, you’ll need to provide the lender with documentation. Some examples include financial statements, tax returns, your business plan, business valuation, and purchase price numbers.
• Business information: Evaluate the type of business you plan on acquiring. Understand how it’ll fit in with your future business goals. Do your due diligence so you’re not caught by any surprises down the line.
• Industry: If you’re using business acquisition financing to buy a franchise or take over a business, understand the industry. Each industry has its own quirks and challenges. You want to know what you’re getting into, so there are fewer surprises.
• Funding timeline: Consider how fast you need the funds to make the acquisition. Some lenders can move much faster than others. For example, online lenders and alternative business loan lenders may be more efficient with the funding timeline. Traditional bank loans and SBA loans may take longer, so you need to take that into account when choosing a lender.

3 Types of Business Acquisition Financing and Loans

If you need business acquisition financing, here are some of the top options to consider. What is the right fit for you depends on your business needs, desired timeline, and loan amount.

1. Term Loans

Term loans are named as such because they’re repaid over a set term. When you take out a term loan, you can receive your loan amount upfront to help you make the acquisition. This makes them an appealing option for business acquisition financing. You get the funds needed to acquire a business to make the process go smoothly. Plus, you can make more manageable monthly payments over time. Generally, term loans come with fixed interest rates. For business owners looking to budget, that can make it easier to plan.

2. SBA 7(a) Loan

The Small Business Administration (SBA) is an agency that offers various types of loans to small businesses. As part of the SBA 7(a) loan program, business owners can:

• Use the funds to acquire or improve real estate buildings
• Use the funds to pursue a change of ownership (complete or partial)

Though the SBA has other loan options like the SBA 504 loan and microloans, the SBA 7(a) loan program is the one that can be used for business acquisition financing.

SBA loans can be advantageous as they’re backed by the agency. That, in turn, lowers the risk for lenders. Plus, loan amounts can be up to $5 million. A major disadvantage can be the red tape involved and longer processing and funding timelines.

3. Seller Financing

In some cases, the seller of the business you want to purchase may be able to work with you on an agreement. This is typically called seller financing. Through this type of arrangement, the seller acts as the provider of the loan. Of course, you’d need to agree on the loan terms and be on the same page before moving forward.

These three business acquisition financing options are popular. They can get you the funds you need to facilitate the transaction. Other types of financing that can be useful as you expand your business include:

• A business line of credit: If you think you’ll have ongoing financing needs, a business line of credit may be a good solution. The way it works is kind of like a credit card. First, a bank or lender will extend a line of credit to you for a certain amount. You’re able to use what you need from that amount. As a borrower, you only repay what you use. When you do that, your remaining available credit is ready to use again. This can be a nice alternative to a lump sum loan as it provides more flexibility.
• Equipment financing: If you need to get equipment to help your business expand, you can turn to equipment financing. Typically, you can go with an equipment lease if you want something more flexible without having a major commitment. If you know the equipment is an investment, an equipment loan can be the smarter option. In this case, the equipment you buy is collateral used for the loan. Because the lender has an asset to fall back on, it reduces the overall risk, making it more accessible.

How to Get Business Acquisition Financing

To get business acquisition financing:

1. Evaluate your needs: Based on your business needs and goals, understand what type of financing will be best. Consider the type of business you’re acquiring and the pros and cons that come along with it.
2. Research options: Check out at least three different lenders for a fair comparison. Compare fees, interest rates, loan amounts, and of course, the eligibility requirements.
3. Confirm purchase price: Make sure you know the details of the purchase and how much it’s going to cost you to make the deal.
4. Submit a letter of intent: Draft a letter of intent expressing your intentions to purchase the business. Include the details of the acquisition and sign and submit the letter.
5. Apply for financing: After you identify the type of business acquisition financing you plan on going with, you can select a lender and submit an application.
6. Secure financing: If you’ve been approved, you can secure the financing you need. From there, you can facilitate the transaction and acquire another business. To remain in good standing, start making payments as needed based on your loan agreement. If you make your payments on time and borrow responsibly, it could help you build your business credit score if the lender reports to credit bureaus.

Final Thoughts

A business acquisition can kick off an exciting new chapter. It could mean a career transition or serve as an expansion of your current business. If you need business acquisition financing options, start planning early. Do extensive research on both the business you plan to acquire as well as the business lending options available. Putting in the time upfront can help you make a smart investment and find the best business acquisition loans for your situation.

FAQs about Business Acquisition Financing

If you have more questions about business acquisition financing, read on for more information.

Can You Get a Business Acquisition Loan No Money Down?

Whether you can get a business acquisition loan with no money down depends on the lender. Some lenders may allow this, however, many lenders do require a down payment.

What Business Acquisition Financing Options Are Available?

If you’re looking for business acquisition financing, you have several options. These include term loans, a business line of credit, and small business loans from SBA lenders. The best business loans will have competitive rates and repayment terms that work for you and will vary by borrower.

How Hard Is It to Get a Business Acquisition Loan?

You typically need to meet strict eligibility requirements to get approved for bank loans for a small business acquisition. You can also look at some private lenders for business acquisition loans that may have more flexible requirements.

How Does an Acquisition Loan Work?

Business acquisition financing and loans allow business owners to receive the capital they need to buy an existing business. You can look for this type of business financing at traditional banks, credit unions, and some online lenders.

Who is Eligible for a Business Acquisition Loan?

To be eligible for business acquisition financing and loans, business owners generally need a strong personal credit score, several years in business, and solid financials. Lenders will have their own eligibility requirements that borrowers must meet.

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